Increasing differentiation

The proliferation of ‘opt-outs’ from the treaties, enhanced cooperation and agreements between some member states outside the EU legal framework are raising questions on where the boundaries of differentiated integration lie in an organisation based on a unique legal order with common institutions and common principles.

Since 1 January 2014, the euro area comprises 18 member states. With the exception of the UK and Denmark, which have opt-outs, the other member states (the so-called ‘pre-ins’) are legally bound to join once they meet all the criteria.¹¹ Twenty-two of the EU member states and the four EFTA countries participate in the Schengen Area.¹² Bulgaria, Croatia, Cyprus and Romania will eventually join when they meet the criteria, whereas Ireland and the UK have opt-outs. These two countries also have an opt-out from the Area of Freedom, Security and Justice, with the possibility to opt in on a case-by-case basis. As a result of the opt-outs, the EU is becoming not only multi-speed but also multi-layered, that is, with

‘ins’, ‘pre-ins’ and ‘the others’. In relation to eurozone matters, there is also the risk of a ‘two-tier Europe’, that is, the development of a different institutional setting to decide on issues that only affect the euro members.

Apart from the existing Eurogroup and Euro summits, ideas have been floated to create a special committee in the EP or a Euro-chamber with members of national parliaments. Non-eurozone members, and specially the pre-ins, are concerned about these developments. The gap between

10 C. Hefftler, V. Kreilinger, O. Rozenberg and W. Wessels, “National Parliaments:

Their emerging control over the European Council”, Notre Europe Policy Paper 89, Notre Europe, Paris, 29 March 2013.

11 Sweden is not joining the ERM II in order to avoid compliance with one of the conditions (exchange rate stability) and thus the introduction of the euro. Monaco, San Marino and the Vatican also use the euro on the basis of formal agreements with the EU, whereas Andorra, Kosovo and Montenegro do it de facto.

12 Monaco, San Marino and the Vatican can be considered as de facto members.

SHIFTING EUINSTITUTIONAL REFORM INTO HIGH GEAR |17 members and non-members of the eurozone is likely to grow when the Lisbon voting provisions enter into force in November 2014, given that euro members will constitute a qualified majority in the Council.

The Council can adopt a decision authorising enhanced cooperation between at least nine member states as “a last resort, when it has established that the objectives of such cooperation cannot be attained within a reasonable period by the Union as a whole”.¹³ Two Council regulations implementing enhanced cooperation have been adopted so far.

One regulation, which entered into force in 2012 for the 14 participating member states, concerns the law applicable to divorce and legal separation.¹⁴ The other, adopted by 25 member states, addresses unitary patent protection with regard to the applicable translation arrangements and will be applicable after the Agreement on a Unified Patent Court is ratified by at least 13 states.¹⁵ After receiving the consent of the EP, the Council adopted a decision authorising enhanced cooperation in the area of financial transaction tax (FTT), but the implementing regulation has not yet been adopted.¹⁶ The growing use of the enhanced cooperation procedure (ECP) has raised questions about what should be considered a ‘reasonable period’ when trying to reach an agreement that includes all member states, and whether nine member states will constitute a critical mass in a Union with more than 30 members. Also, the authorisation to proceed with enhanced cooperation must be granted by a qualified majority in the Council, but the regulations implementing the enhanced cooperation are adopted only by the participating members. According to the Treaty, the other member states may participate in the deliberations, their rights and obligations should be respected and the cooperation should be kept open, but this might be interpreted in various ways.

13 Art. 20 TEU; Arts 326-334 TFEU. The Treaty of Lisbon also included the possibility for member states to create Permanent Structured Cooperation in the area of security and defence (Arts 42.6, 43.1 and 46 TEU).

14 The provisions will apply to Lithuania as from 22 May 2014.

15 Spain and Italy did not sign up and brought actions before the Court of Justice of the EU against the Council’s authorisation to proceed with the enhanced cooperation on the creation of unitary patent protection with regard to the applicable translation arrangements. Actions were eventually dismissed. Italy ratified the Agreement on the Unified Court, whereas Poland adopted the Regulation but is now considering not ratifying the Agreement.

16 The UK has challenged this decision before the CJEU.

Figure 4. Differentiated integration in the EU treaties and other inter-governmental treaties

As Figure 4 illustrates, the adoption of international treaties outside the EU legal framework adds further complexity to the picture and raises additional concerns. The Treaty on Stability, Coordination and Governance in the Economic and Monetary Union (TSCG) was signed by all the members of the EU except the Czech Republic and the United Kingdom (and Croatia). The Treaty is in force in the 24 states that completed the ratification process.¹⁷ Denmark and Romania are bound by the fiscal provisions, while these provisions will only apply to the remaining non-eurozone states when they adopt the euro. All the non-eurozone members take

17 Belgium has signed but not ratified the treaty.

UK

SHIFTING EUINSTITUTIONAL REFORM INTO HIGH GEAR |19 part in the European Stability Mechanism (ESM) and together with Bulgaria, Denmark, Lithuania, Poland and Romania all participate in the Euro-Plus Pact. The EP does not participate in the negotiation and adoption of these inter-governmental agreements, which are not part of the acquis communitaire and therefore are not subject to ECJ’s jurisdiction.

Recommendations on the negotiation and adoption phase

1. Promote the integrity of the Union and the Community method

Further integration through international treaties concluded outside the EU’s legal framework should be limited to exceptional cases, giving priority to the OLP and ECP whenever this is legally possible. Where inevitable, the inter-governmental agreements should be open to all EU members, involve the EP and set a clear target to be incorporated into EU law. All means of differentiated integration should preserve the rights and interests of those member states that might join in the future.

2. Upgrade the organisational structures of the EP

The EP’s committees should be aligned with the new clusters in the Commission. In-house expertise should be enhanced and balanced across committees. The Conference of Committee Chairs should be given delegated powers to identify the lead committee with exclusive competences. Parliament needs to cut back its overly bureaucratic rules for inter-committee cooperation and encourage more informal joint working methods and hearings. Lobbying rules in the EP should be strengthened.

Public consultations on specific parts of the legislative dossiers would enable input from a wider range of stakeholders.

3. Improve the role of the Council in the legislative process

The Council should improve coordination with the EP and devote more attention to the clarity of the legislative acts. At later trilogue stages, the Presidency should have a clearer mandate from the Council. The participation of the chair of the Council’s working parties in the trilogue negotiations should not preclude the adequate involvement of the Permanent Representatives so as to ensure appropriate political accountability. The General Affairs Council should regain the ground lost to the Presidency of the European Council and its meetings with the sherpas of the heads of government by setting a compelling strategic agenda to draw in representatives at Ministerial level. GAC meetings could be chaired by the Prime Minister of the country holding the rotating

Presidency. Assistance and cooperation between all the members of the trio Presidency should be strengthened on the basis of the common programme for the 18 months, which should take good account of the strategic legislative planning.

4. Enhance the democratic accountability of the European Council

The President of the European Council should address the plenary of the EP before and after European Council and Euro summits. In the framework of the so-called ‘economic dialogues’, the possibility to invite the President of the European Council to report and explain its decisions on reinforced budgetary surveillance, the coordination of economic policies, the excessive deficit procedures and macroeconomic imbalances should be promoted.

5. Reinforce inter-parliamentary cooperation between the EP and the national parliaments

Double legitimisation in the EU requires strengthening cooperation between the EP and the national parliaments. The EP can benefit from the MPs’ views and expertise, whereas MPs can improve their say in EU decision-making and their knowledge and interest in EU affairs, which would benefit their scrutiny of national governments and the implementation of EU legislation. The Inter-parliamentary Committee meetings, organised by a committee of the EP to discuss specific legislative proposals with the members of the respective standing committees at national level, should be promoted. Financial support should be provided at committee and rapporteur level on specific dossiers. The meetings should bring together the most appropriate representatives at the right time, avoiding large events that make dialogue and debate more difficult.

They could be conducted by video conference using EP interpretation facilities. The EP and the national parliaments could conclude an agreement setting the basic features of the antiparliamentary cooperation, the rules and reciprocal commitments, as well as specific arrangements to promote the relations. Cooperation in the framework of inter-parliamentary conferences should also be upgraded and measures should be taken so as to improve their visibility, influence and attractiveness. In particular, the Commission and the Presidency should participate at the highest level possible in the recently created Inter-parliamentary Conference on Economic and Financial Governance of the European Union envisaged in the Article 13 of the TSCG, and national parliaments should ensure the high profile of their delegations.

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